Earlier this month, California’s state legislature approved a bill that would allow the state to be the first state to develop its own line of generic drugs, putting it in direct competition with larger drug manufacturers.
The bill would require the California Health and Human Services Agency (CHHSA) to enter into partnerships with other state departments as necessary to, among other things, increase patient access to affordable drugs. The bill would require CHHSA to enter into partnerships to produce or distribute generic prescription drugs (including at least one form of insulin, provided that a viable pathway for manufacturing a more affordable form of insulin exists at a price that results in savings).
The bill would require CHHSA to report to the Legislature a description of the status of the drugs targeted for manufacture and an analysis of how CHHSA’s activities have impacted competition, access, and costs for those drugs by July 1, 2022. Then, CHHSA would have to submit a report to the Legislature on or before July 1, 2023, that assesses the feasibility and advantages of directly manufacturing generic prescription drugs and selling generic prescription drugs at a fair price.
Interestingly, the bill would exempt all nonpublic information and documents relating to this program from disclosure under the California Public Records Act in order to protect proprietary, confidential information regarding manufacturer or distribution costs and drug pricing, utilization, and rebates.
While the bill doesn’t outline many specifics, as noted above, the one specific is that it would require the state to make “at least one form of insulin, provided that a viable pathway for manufacturing a more affordable form of insulin exists at a price that results in savings.” No other mandates were included in the legislation as far as other drugs that must be made.
The legislature may be intending for the state to follow a model previously announced by Civica Rx, which was initially supposed to be that of a generic drug manufacturer, but after evaluating the United States Food and Drug Administration (FDA) Abbreviated New Drug Application (ANDA) process, Civica Rx tries to purchase expiring ANDAs from generic manufacturers and is now more of a contract drug purchaser, more in line with a group purchasing organization. Now, two years after Civica’s announcement, they are up to partnerships with more than 1,200 hospitals around the United States.
This would be quite expensive for the state to do, as the state’s fiscal analysis puts the estimate between $1 million and $2 million, in addition to staff costs.
While Governor Gavin Newsome has until September 30, 2020, to either sign or veto the measure, even if he signs it, it is likely that it will take years for California to successfully bring products to market.